The Critical Importance of Performing Cyber Due Diligence Before Acquiring a Dental Practice

 

In the fast-evolving DSO industry, acquisitions of dental practices are increasingly common as organizations seek to expand their footprint, grow their businesses, or enter new markets. However, the integration of digital technologies and the sensitive nature of patient data make cyber due diligence an essential step in the acquisition process. Failing to thoroughly assess the cybersecurity posture of a dental practice can lead to significant financial, legal, and reputational risks. This article explores why cyber due diligence is indispensable before acquiring a dental practice, highlighting key considerations, risks, and best practices.

The Growing Cybersecurity Threat in Healthcare

Healthcare practices are prime targets for cybercriminals due to the vast amounts of sensitive data they handle, including protected health information (PHI) and financial records. Criminal hackers are also well aware that they can limit a practice’s ability to function when they encrypt data and block access to patient charts, images, schedule, etc. According to a 2024 report by IBM Security, the average cost of a data breach in the healthcare sector reached $10.93 million, the highest of any industry. The consequences of a breach extend beyond financial losses, encompassing regulatory penalties, patient trust erosion, and operational disruptions.

Acquiring a dental practice without evaluating its cybersecurity framework is like purchasing a house without inspecting its foundation. Hidden vulnerabilities, such as outdated or unpatched software, weak access controls, or unaddressed compliance gaps, can become costly liabilities post-acquisition. Cyber due diligence ensures that potential risks are identified and mitigated before the deal is finalized, safeguarding the acquiring organization’s investment and reputation.

Key Risks of Skipping Cyber Due Diligence

Regulatory Non-Compliance: Dental practices in the United States must comply with stringent regulations, such as the Health Insurance Portability and Accountability Act (HIPAA). Non-compliance with HIPAA can result in fines of up to $1.5 million per violation. Acquiring a practice with unresolved compliance issues could transfer these liabilities to the buyer, leading to unexpected costs and legal battles. The proposed changes to the HIPAA law are mostly centered around increasing cyber protection to better protect patient data. Services like vulnerability scanning and penetration testing will now be required vs suggested.

Data Breaches and Legacy Vulnerabilities: A target practice may have experienced unreported data breaches or harbor vulnerabilities in its IT systems. For instance, unpatched software or misconfigured cloud storage could expose patient data. Without proper due diligence, these issues may go unnoticed until a breach occurs post-acquisition, damaging the acquiring organization’s credibility. A hidden or unknown prior breach can become the responsibility of the acquiring organization.

Third-Party Risks: Many dental practices rely on third-party vendors for electronic health record (EHR) systems, billing software, or telehealth platforms. Weaknesses in these vendor relationships, such as inadequate security protocols or lack of contractual safeguards, can introduce risks. Cyber due diligence can help evaluate the security practices of these vendors if the purchasing group opts to have risk assessments performed against these vendors.

Reputational Damage: A cybersecurity incident tied to an acquired practice can erode patient trust and tarnish the acquiring organization’s brand. In an era where patients are increasingly aware of data privacy, reputational damage can lead to loss of business and difficulty attracting new patients.

Components of Effective Cyber Due Diligence

To mitigate these risks, acquiring organizations must conduct a comprehensive cyber due diligence process tailored to the healthcare sector. Key components include:

• Electronic Data Handling — What types of electronic data (i.e., credit card, patient, personnel) does the practice access, send, receive, or store?
• Data Privacy and Protection — Who has access to what data and systems, inclusive of vendors?
• IT Security Policies and Procedures — Does the organization document its procedures and ensure that its actions align with those procedures to maintain the confidentiality and integrity of its data and systems?
• Network Safeguards — Firewall rules/configurations, remote access, wireless networks, IT management, segregating network segments.
• IT System Access Safeguards — Strong passwords, multi-factor authentication (MFA), physical security controls, etc.
• IT Computer Equipment Safeguards — Anti-virus/malware, patch management of computers, printers, and IT devices, email security, equipment life cycle.
• Systems Backup & Recovery — Disaster Recovery/Continuity Plan, access to encrypted backup data.
• Human Resources Policies — How is the practice’s data stored (i.e., paper, electronic)? Is the data secure from unauthorized access?
• Vulnerability Scanning — Identifying all technical vulnerabilities present on all workstations, laptops and servers.
• Web Application Scanning — Searching for software vulnerabilities within Web applications.
• Malware Identification — Identify any malware that may be present on the network and if there are any signs of a prior breach.

 Best Practices for Cyber Due Diligence

• Engage Cybersecurity Experts: Partner with cybersecurity firms specializing in healthcare to conduct thorough assessments. Their expertise ensures that no stone is left unturned.
• Integrate Findings into Deal Terms: Use due diligence findings to negotiate deal terms, such as price adjustments or indemnification clauses, to account for identified risks.
• Plan for Post-Acquisition Integration: Develop a roadmap to address vulnerabilities post-acquisition, such as upgrading systems or implementing new security policies and implementing an effective layer of preventative security.
• Introduce and Maintain Ongoing Monitoring: Cybersecurity is not a one-time exercise. Establish continuous monitoring, ongoing technical vulnerability scans and simulated phishing to protect the acquired practice against evolving threats.

Cyber due diligence empowers acquiring organizations to make informed decisions, identify hidden liabilities and ensure a secure, compliant and investment-protecting transition.

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🚨Recent notable healthcare cyber incidents:

On February 3, 2025, True Dental Care discovered that an unauthorized individual or entity had gained access to its computer systems. The intruder placed a virus on the system, encrypting data and potentially viewing sensitive patient information. True Dental Care did not pay any ransom to the intruder and immediately engaged a forensic firm to investigate and restore the compromised systems.

The data breach affected approximately 17,640 individuals in the United States. True Dental Care reported the breach to the U.S. Department of Health and Human Services on April 2, 2025.

True Dental Care for Kids and Adults LLC is a dental practice located in Jersey City, New Jersey and was established in 2017 by Drs. Mila Cohen and Daniel Cohen.

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On March 20, 2025, OrthoMinds, LLC filed a notice of data breach with the Attorney General of California after discovering that an unauthorized party was able to access parts of the company’s computer network. In this notice, OrthoMinds explains that the incident resulted in an unauthorized party being able to access consumers’ sensitive information, which includes their names, Social Security numbers, dates of birth, medical information, health insurance information, and payment card information. Upon completing its investigation, OrthoMinds began sending out data breach notification letters to all individuals whose information was affected by the recent data security incident.

OrthoMinds, LLC is a healthcare technology company that provides cloud-based practice management software specifically designed for orthodontic practices and is headquartered in Alpharetta, Georgia.

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Dental Cyber Watch is sponsored by Black Talon Security, the recognized cybersecurity leader in the dental/DSO industry and a proud partner of Group Dentistry Now. With deep roots within the dental and dental specialty segments, Black Talon understands the unique needs that DSOs and dental groups have when it comes to securing patient and other sensitive data from hackers. Black Talon’s mission is to protect all businesses from the devastating effects caused by cyberattacks—and that begins with a robust cyber risk mitigation strategy. To evaluate your group’s current security posture visit www.blacktalonsecurity.com.